THE chart of the euro/dollar shows that the euro’s troubles of last year are clearly a thing of the past. Its chart has a significantly higher target as the euro continues its recovery
Euro/Dollar: Higher target for euro.
Recommendation: Buy the euro on pullbacks.
Trend: Euro up in the short and medium term.
Strategy: Buy a pullback towards line 3.
n The euro/dollar has formed a large inverse head and shoulders (as labelled) and is pointing to a significantly higher target from this pattern.
n The stochastic oscillator (on top) is in its overbought region again, so a temporary pullback is very possible.
n Traders buy the euro/dollar on a pullback, ideally as close to line 3 ($1.3405) as possible. Medium-term players buy on a pullback and hold to the upside target ($1.4350). Be aware that there will certainly be corrections along the way.
n Moreover, short-term traders are to continue buying short-term corrections all the way up. Support for larger pullbacks ongoing is line 2, now at the $1.3220 level.
n The main upside target is $1.4350, based on the height of the large inverse head and shoulders projected up. This target will be reached during the course of this year.
n For short-term traders buying on a minor pullback, the stop-loss is a close below $1.3390. But the medium-term stop, for now, is to be kept wide as a close below $1.2700.
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za